Maryland Fire Insurance v. Gusdorf

Miller, J., delivered the opinion of the Court. This case involves a small amount of money, but presents a question of much importance in insurance law, which has not hitherto been decided in this State. By the policy sued on, the appellants, in consideration of a premium of $25, paid them by the appellee, insured the latter for one year, to the amount of $2000, “on stock of goods such as are generally kept in a country store, contained in three story brick building situated at Culpeper City, Culpeper County, Virginia.” Among others, the ⁵¹¹ policy contains a clause or provision “that anything less than a distinct agreement endorsed on this policy shall not be construed as a waiver of any written or printed condition, restriction, or stipulation herein contained.” The action was in assumpsit, and the policy was under seal, but all errors of pleading were waived by agreement. The fire and damage to the goods to the extent, as found by the jury, of §429.81, occurred during the year, but not until after the goods had been removed to an adjoining building.

The insurance was effected by the plaintiff himself, by negotiations with the president of the company, who issued the policy. As to the circumstances under which the goods were removed, the plaintiff testified that some time previous to the removal he went to the company’s office, and there saw the president, and notified him that he desired to move the stock of goods into another brick building, adjoining that in which they then were, and of the same character, and that he desired to know if there was any objection to his so doing; that the president then asked him if he had his policy with him, to which, not knowing it was necessary he should have brought it, witness replied that he had not brought the policy with him; that the president then said it was no matter, that he would fix it all right, and witness understood him to sajr it was not necessary for him to bring the policy. The Court, against the objection of the company, admitted this testimony, and instructed the jury that if they found it to be true, then the company cannot avail itself, as a defence to this action, of the fact that the goods were so removed, and that the permission to do so was not endorsed on the policy. Are these rulings correct?

Apart from decisions elsewhere to the same effect, our own decision, in Annapolis & Elk Ridge Rail Road Co. vs. The Baltimore Fire Ins. Co., 32 Md., 37 , is conclusive upon us that the terms “ contained in” a particular building, limit the risk to the time the goods remained in the same ⁵¹² building in which they were when the policy was issued. They constitute a restriction upon the risk and make it continue only so long as the goods remained in that particular building. This being so, it is insisted on the one side, that these rulings infract the cardinal and salutary rule of evidence, that parol testimony is inadmissible to contradict or vary the terms of a written instrument, and on the other, that the company is estopped by the assertions and declarations of their president, upon which the assured relied and acted in removing his goods, from setting up this defence.

In National Fire Ins. Co. vs. Crane, 16 Md., 260 , which which was a case in Equity, (and most elaborately argued and carefully considered, both in the Court below and in this Court,) the policy provided that if the assured had taken out any other insurance on the property, it should be void unless he notified the same to the company and caused the same to be endorsed on the policy. It was proved by parol evidence that the. assured, before the policy was issued, did notify the president of the company of a prior insurance, but tíre fatter issued the policy without the required endorsement and received the premium, his clerk saying it was all right. In noticing the defence, that the endorsement was not in fact made, this Court say “ whatever effect the want of such endorsement may have at lato in an action on the policy, it cannot be urged in a Court of Equity in a case otherwise free from difficulty. ’ ’ Then, after adverting to the too common practice of insurance companies to meet applications and refuse adjustments on frivolous and unjust pretences, in order to defeat fair claims, on contracts of which good faith is the very essence, and noticing the fact that the insurance was sought and the policy issued by the president of the company, whose duty it was to make the endorsement, they say, in very just and forcible language, “in such a case we are called upon to say the insured is without ⁵¹³ remedy ; on the contrary, we think it would be a reproach to the jurisprudence of the State, if this company were discharged from their contract on any such ground.” Here the acts, omissions of duty and declarations of their president were held in equity to estop the company from setting up an inequitable defence.

Since that decision, the doctrine of equitable estoppel has, especially in insurance cases, been extended and applied at law as well as in equity, by adjudications of the Courts of last resort in many of the States, and the current and weight of judicial precedent and authority in this country, have established the proposition that, in such cases, the estoppel is equally available in either tribunal. The Supreme Court in Wilkinson's Case, 13 Wallace, 222, has also in a very able opinion sustained this position. That was an action at law on a life insurance, policy, in which some of the answers to the written interrogatories in the application, made material to the risk, were proved to be untrue. Parol evidence was then introduced by the plaintiff, to show that these answers wore in fact put in by the company’s agent, on his own